- With 5.43T LUNC still in circulation, the community switches to deflationary tactics.
- Terra Luna Classic capitalizes 6% daily gains after the key burn proposal is approved.
- Several Terra Classic validators express their reservations about the new mechanism.
Terra Luna Classic’s (LUNC) blockchain strives for another critical improvement regarding LUNC burns. In widely accepted proposal #12120, dubbed “Genuine Labs’s Tax2gas Implementation,” Genuine Labs offers the community a crucial parameter change known as Tax2Gas.
Tax2Gas is a burning consensus set to go live on the Layer-1 chain. Once implemented, this token-burning consensus can drastically shift Terra Luna Classic’s (LUNC) supply dynamics, erasing many overprinted tokens.
The strategy boosts LUNC’s tax burn rate from 0.5% to 1.5%. While the parameter change sets a 1.2% burn tax as originally intended before the 2022 Terra Luna fiasco, it also adds another 0.3% to bolster the chain’s further development and revival efforts.
Here’s How LUNC Burns Can Be Affected
As proposal #12120 has officially passed the required threshold with 65% of members voting for this initiative, the developers are preparing to make the necessary changes.
Genuine Labs, the company responsible for the current technical development of Terra Luna Classic’s Layer-1 chain, has already proven its worth by dodging the recent Terra $6.8M hack simply by rolling out security enhancements on Terra Luna Classic (LUNC) promptly.
This time, the Tax2Gas implementation is bound to simplify LUNC burn tax calculations, as previously, the simulation endpoint only provided gas estimates. Because of this, on-chain clients and decentralized applications (dApps) had to calculate the LUNC tax burn themselves.
Intriguingly, these developments planted optimism among LUNC community members and picked up the market sentiment surrounding the altcoin. After flopping by over 15% in two weeks, LUNC inked 6% gains on Friday, restoring $0.00007 support levels.
Bouncing back from a double bottom pattern on August 5, 2024, Terra Luna Classic broke out of the bearish constraints, as the Chaikin Money Flow (CMF) indicator points slightly above zero. However, the supply dynamics still have 5.43T out of 6.77T tokens in circulation, which could induce further price drops unless the new LUNC tax burn system substantially picks up the pace.
On the Flipside
- In spite of 65% approval, the proposal received substantial backlash from several stakers and validators on the network, giving priority to trading volume over burn tax.
- For instance, validator Battle Force Validator considered a 0% LUNC burn tax to be the end goal, this way making Terra Luna Classic more attractive for trading.
Why This Matters
Modifications to the coin’s tokenomics can have a long-term effect on the price and overall relevance of the parent chain.
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